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The Lessor of a Sales-Type Lease Records the Following Items

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The lessor of a sales-type lease records the following items in net income, if they are part of the lease agreement: Interest revenue on the net investment in the lease for a sales-type lease and any variable payments received that were not included in the net investment.


Definitions:

Legal Bankruptcy

A legally declared inability or impairment of ability of an individual or organization to pay its creditors, which can lead to a legal process for resolution.

Technical Insolvency

A financial situation where an entity's liabilities exceed its assets but it continues to operate because it can meet its short-term obligations.

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